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Fitch ups CenterPoint view to stable
Fitch Ratings said it affirmed the outstanding senior unsecured debt obligations of CenterPoint Energy Inc. at BBB-. Also affirmed are outstanding ratings of subsidiaries CenterPoint Energy Houston Electric LLC and CenterPoint Energy Resources Corp. The outlook for all three companies has been revised to stable from negative.
The rating action follows Fitch's assessment of the Nov. 10 determination by the Public Utility Commission of Texas that CenterPoint Energy Inc. will be permitted to recover a true-up balance of $2.3 billion, including accrued interest. Although this amount is significantly less than the $3.7 billion (excluding interest) true-up sought in the company's original application with the commission, it is in line with Fitch's expectations when taken together with other expected cash proceeds.
The conclusion of the true-up proceeding and expected securitization of stranded costs is the second of two highly anticipated deleveraging events factored into Fitch's ratings for CenterPoint Energy Inc. and its two wholly owned subsidiaries. The first was the definitive agreement reached by CenterPoint Energy Inc. on July 21 to sell its 81% interest in Texas Genco Holdings for after-tax cash proceeds of $2.5 billion in a two-step transaction expected to be completed by the first half of 2005.
Ratings affirmed by Fitch include CenterPoint Energy Inc.'s senior unsecured debt at BBB-, unsecured pollution control bonds at BBB-, trust originated preferred securities at BB+, zero premium exchange notes (ZENS) at BB+; CenterPoint Energy Houston Electric LLC's first mortgage bonds at BBB+, general mortgage bonds at BBB, and $1.3 billion secured term loan at BBB; and CenterPoint Energy Resources Corp.'s senior unsecured notes and debentures at BBB and convertible preferred securities at BBB-.
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